Structure of business/organisation Flashcards
Organisational charts
A diagram that shows the hierarchy in a business, usually from top to bottom
Span of control
The number of employees (subordinates) from whom a manager is responsible
Span of control effectiveness depends on.. (3)
1) The personality of the manager
2) The skills of the subordinates
3) The size of the business
Chain of command
The way in which responsibility for employees is organised within a business
Levels of hierarchy
The number of levels or layers in a business organisation
Delayering
A process of reducing the number of levels or layers in an organisation
Delegation
Where responsibility for carrying out a task or role is passed onto someone else in the business
Empowerment
Giving employees the power to do their job
Tall structure
Mechanistic
- narrow span of control
Flat structure
Organistic
- wide span of control
Organisation by PRODUCT
Arranging the business according to what each department does
Organisation by SYSTEM
Organising according to the different products made
Advantage of organisation by system
Specialists can concentrate on what they do best
3 Disadvantages of organisation by system
1) Each part may act as a separate entity, concerned with its own agenda
2) It can be difficult to accredit success and/or blame
3) Departments may not be able to clearly see their successes
3 advantages of organisation by product
- can see successes and identify problems
- managers can focus energy on one product
- each centre has a lot of autonomy (independence) this increases motivation
3 disadvantages of organisation by system
- different products compete for resources this can cause conflict
- duplication of departments can waste resources
Matrix structure
Individuals work across teams and projects as well as within their own departments or function
Centralised Structure
Decision making firmly at the top of the hierarchy (senior management)
2 benefits of centralisation
- easier to implement common policies and practises for the whole business
- prevents other parts of the business from becoming too independent
4 drawbacks of centralisation
- more bureaucratic - often extra layers in the hierarchy
- local or junior managers are likely to be much closer to customer needs
- lack of authority down the hierarchy may reduce manager motivation
- customer service, lost flexibility and speed of local decision making
Decentralised structure
Decision making spread out to include more junior managers in the hierarchy, as well as individual business units or trading locations
7 benefits of decentralisation
- decisions are made closer to the customers
- better able to respond to local circumstances
- improved level of customer service
- can enable a flatter hierarchy
- good way of training and developing
- junior management
- facilitates empowerment
5 drawbacks of decentralisation
- decision making not necessarily “strategic”
- harder to ensure consistent practises and policies at each location
- may be some diseconomies of scale
- who provides strong leadership when needed
- harder to achieve tight financial control
